Plain-speaking economist Purbaya takes the helm as Indonesia’s Finance Minister

JAKARTA – Just a few months before being named Indonesia’s new Finance Minister, Purbaya Yudhi Sadewa raised eyebrows in markets by calling the International Monetary Fund (IMF) “stupid” for cutting its growth outlook for South-east Asia’s largest economy.

“Don’t believe the IMF. If you want economic prediction, ask me. I know better,” he said, even though the lender’s 2025 gross domestic product (GDP) growth forecast of 4.7 per cent was largely in line with analysts’ expectations and reflected global uncertainty.

Mr Purbaya said Indonesia’s economy crashed during the Asian financial crisis in the late 1990s when it requested financial assistance from the IMF but did much better in subsequent crises without the IMF.

The comments provided a glimpse of the governing style of Mr Purbaya, 61, who was sworn in as Finance Minister on Sept 8 by President Prabowo Subianto, replacing Dr Sri Mulyani Indrawati, one of the country’s longest-serving finance ministers who had won the trust of investors both at home and overseas.

Seen as a surprise pick by markets, Mr Purbaya has aligned with the President’s desire to grow the economy at a faster clip than its current 5 per cent rate.  

The removal of Dr Sri Mulyani

, who at one time served as an IMF executive director, came after two weeks of

often violent protests and unrest across the country

. Initially triggered by fury over big allowances for legislators, the protests later broadened to target many issues, including government spending priorities.

Shortly after his inauguration, Mr Purbaya said the unrest reflected “the voice of a small part of our people”, promising that protests would cease as he embarks on the task of boosting economic growth and creating more jobs.

He said Mr Prabowo’s goal of lifting economic growth to 8 per cent, a rate last seen in 1995 and considered by economists as ambitious, was “not impossible”.

“We will create a fiscal policy that has an optimal thrust for the economy. ...If you don’t spend, the economy doesn’t move,” Mr Purbaya said.

Fiscal credibility

Economists have credited Dr Sri Mulyani for reforming Indonesia’s taxation system and steering the country through many global challenges while keeping a tight leash on the budget to ensure the government is not saddled by heavy debt.

Such is her reputation that Mr Mohit Mirpuri, fund manager at SGMC Capital, said her departure “marks the end of an era of fiscal credibility”.

Mr Prabowo, on the other hand, won the 2024 election comfortably on the platform of costly welfare programmes, including providing free meals for 83 million children and pregnant women.

Speculation has been rife that Mr Prabowo, who prior to taking office had said Indonesia was under-leveraged, might remove a legal deficit ceiling for the annual budget deficit of 3 per cent of GDP, a rule introduced after the late 1990s crisis to control public debt.

Asked whether he is committed to the deficit ceiling, Mr Purbaya said: “I am a fiscal expert, so I fully understand what a prudent fiscal policy is like.”

Pro-growth

Mr Purbaya said he was surprised when he was told by phone of his appointment as finance minister. “I thought I was scammed,” he told reporters.

Mr Purbaya, who studied electronics engineering at the Bandung Institute of Technology before obtaining his master’s and doctoral degrees from Purdue University, US, began his career as a field engineer at Schlumberger Overseas SA, a Houston-based technology company now renamed SLB, according to his biography at the deposit insurer.

He moved on to economics when he joined state-owned financial firm Danareksa in 2000, and later headed brokerage Danareksa Securities for two years until 2008.

Mr Purbaya joined the government under various roles since 2010, and has been the head of the Indonesia Deposit Insurance Corporation since 2020.

Dr Herman Saheruddin, who worked closely with Mr Purbaya on research at the deposit insurer, said Mr Purbaya has a clear vision, is detail-oriented and “very pro-growth”, often scrutinising numbers on a report that he had produced.

“One view he’s had that has never changed is his belief Indonesia can grow more than 5 per cent and become an advanced country,” Dr Saheruddin said.

In a speech on Aug 20, Mr Purbaya highlighted the importance of equitable development for social justice and recalled the economic thinking of Mr Prabowo’s late father Soemitro Djojohadikoesoemo, who was an economist and minister under Indonesia’s late authoritarian ruler Suharto.

“To be able to achieve high growth, the key is to focus on ourselves through strengthening household purchasing power, increasing domestic investment and boosting productivity in real sectors,” Mr Purbaya said.

An economist with Bank Permata, Mr Josua Pardede, said Mr Purbaya faces many challenges, including convincing investors he would maintain fiscal discipline, central bank independence as well as the integrity of data that Indonesia produces.

“He must also restore public confidence. Taxpayers have been disappointed they contributed a lot but they see unproductive spending, such as for parliament allowances,” he said. REUTERS